The design for an adaptive-rate data transmission system providing very reliable two-way data transmission over a fading mobile channel is outlined and measurements are presented. A single u.h.f. or v.h.f. carrier is required. Operation with practical fading has been tested using a recording of variations in mobile-channel gain in conjunction with a hardware simulation of the system. The tests show that an error probability of 10−10can readily be achieved. For operation in 12.5 kHz bandwidth, four-phase keying at 10 kbauds is proposed. In this case the system will provide a mean data rate in each direction of 1.8 kbit/s with the mean power of the fading signal 7 dB above the receiver noise. With increasing received power the mean data rate in each direction tends to 4.8 kbit/s. These rates can be doubled by interleaving an identical scheme operating on a second carrier frequency.